|Bid||0.00 x 900|
|Ask||0.00 x 800|
|Day's Range||89.43 - 91.68|
|52 Week Range||70.36 - 96.49|
|Beta (3Y Monthly)||0.96|
|PE Ratio (TTM)||15.24|
|Forward Dividend & Yield||1.63 (1.79%)|
|1y Target Est||N/A|
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Canadian National (NYSE: CNI ) and Canadian Pacific (NYSE: CP ), as well as the Canadian government, are investing millions of dollars in infrastructure improvements to support anticipated volume growth ...
Trade tensions and other macroeconomic woes might mar FedEx's (FDX) Q1 results. However, strong e-commerce growth should partly offset this adversity.
"It's tough to know how things will shake," said Greg Northey, vice president of corporate affairs for Pulse Canada, a trade group representing producers and traders of dry beans, chickpeas and lentils. For now, the railways are anticipating high grain volumes this year, in line with volume highs from the previous year. In the 2019-20 crop year, which began Aug. 1 and runs through July 31 in Canada, wheat production is expected to rise to 33.3 million metric tonnes (mmt), compared with 31.8 million in 2018-19, according to the U.S. Department of Agriculture's latest monthly grain supply and demand report.
Loose truck capacity, trade uncertainty and lower coal demand are among the headwinds that some Class I railroads are seeing for the remainder of 2019. Norfolk Southern (NYSE: NSC) also noted softer volumes in the third quarter, followed by flat volumes in the fourth quarter.
Canadian National (NYSE: CNI) is planning to acquire the 220-mile Massena rail line from CSX (NYSE: CSX), both companies said on August 29. Woodard is near Syracuse and Valleyfield is southwest of Montreal. The line also serves cities and towns such as Beauharmois and Huntingdon in the Quebec province and Massena, Norwood, Potsdam and Gouverneur in New York state.
With favorable market conditions in Canada, both Canadian Pacific (CP) and Canadian National (CNI) are on a solid footing for near-term growth.
Federal agency Transport Canada and Minister of Transport Marc Garneau have made a string of rail-related infrastructure funding announcements in recent weeks. The C$2 billion National Trade Corridors' Fund "is a useful program as traffic, both international and domestic is growing," said Bob Ballentyne, president of the Freight Management Association of Canada.
There's not a lot of mystery at the moment when it comes to railroad operator CSX Corporation (NASDAQ:CSX). CSX news of late has been disappointing, thanks to a soft second-quarter earnings report. That report has pulled the CSX stock price down more than 10% -- and trade worries have kept the pressure on.Source: Shutterstock CSX unquestionably is a solid company -- and, at the moment, the premier railroad operator in North America. That alone creates a strong "buy the dip" argument with the CSX stock price now down 17% from its highs.But there are two key questions here. The first is whether even a 17% pullback is enough given factors outside of CSX's control. The second is whether the "buy the dip" case for CSX stock applies just as well to other, cheaper cyclical plays.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Safe Dividend Stocks for Investors to Buy Right Now From here, the answers to those questions are somewhat of a split decision. I'd wager the CSX stock price will start climbing again. But I'd bet, too, that other stocks -- maybe even some in the railroad industry -- will do better. CSX News Doesn't Change the Long-Term CaseShort-term weakness aside, CSX still has been a star performer. The CSX stock price has almost doubled since the 2016 United States presidential election. Even after the selloff, it has seen the biggest gains of the seven major railroad stocks that comprise the Dow Jones Railroads Index. The 132% increase dwarfs the 104% gains at second-place Norfolk Southern (NYSE:NSC).The company has been excellent at controlling expenses. Its 2018 operating ratio -- operating expenses divided by revenues -- was the lowest in that index, at 60.3%. The two Canadian operators, Canadian National Railway (NYSE:CNI) and Canadian Pacific Railway (NYSE:CP), come in next -- at a full point higher.To top it off, after the disappointing CSX news, the stock now is the cheapest of the group. The forward price-to-earnings ratio sits at 14.5x, slightly lower than NSC. It's possible that multiple will rise -- some analysts may still lower 2020 earnings estimates -- but at the least, CSX is valued in line with the peers it's currently outperforming.Given all these positive factors, the selloff looks like an opportunity. And it's not as if the Q2 earnings report was truly that bad. The company did cut full-year revenue guidance, but it left itself room to outperform if second-half demand strengthens. Operating income still increased 2% year-over-year. This wasn't a disaster, but some investors seemed to treat it as such. The Concerns Going ForwardThe performance of CSX stock so far raises one key and seemingly counterintuitive concern. There simply may not be much room left for improvement.Again, CSX's operating ratio is a full point better than that of every other major railroad play. It's three points better than that of Kansas City Southern (NYSE:KSU), and a full five ahead of Norfolk Southern. Is CSX that much better than the rest of its sector? Or is there more room for rivals to catch up -- and drive earnings growth in the process?That concern becomes more important amid the current cyclical fears. Operating expenses for railroads, like those of any business, can be leveraged by revenue growth. But CSX isn't seeing revenue growth coming in the second half of the year. The obvious worry is that declines may continue if the macroeconomic environment in the U.S. weakens. CSX stock already has a headwind from coal shipments, which may not come back. Its CEO, on the Q2 conference call, called the macro picture "puzzling."If the economy turns, revenue growth may head south for more than just a couple of quarters. And it may be CSX whose growth and share price lags, as rivals find more room to cut costs in the new environment. Is CSX Stock the Best Play?Those concerns are real. But at 14x-15x forward earnings, they look priced in. At this point, the declines do seem like they've gone too far.But, again, the other important question is whether CSX stock is the best play. And that's a tougher case to make. Cyclical stocks across the board generally have struggled since the beginning of last year, even though many have rallied somewhat so far this year. And many are downright cheap.Caterpillar (NYSE:CAT), for instance, trades at 10x forward earnings. Many other stocks in industries like construction, boating and automobiles look even cheaper. The risks in those sectors are higher -- but so are the rewards. If an investor has the stomach to make a contrarian bet against the current macro worries, there are options that go beyond CSX and beyond railroads.So from here, the case for CSX stock looks solid but also a bit narrow. It's for investors who are willing to take on cyclical risk -- but only a little. Long-term, the selloff is an opportunity. But the same factors that drove the selloff could open up intriguing opportunities elsewhere.As of this writing, Vince Martin did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post CSX Stock Is a Good Play -- But Is It the Best One? appeared first on InvestorPlace.
Canadian National has expressed interest in recent months to fortify its presence in eastern Canada, including making plans to invest its resources at the ports of Halifax and Quebec. The new intermodal service will compete against trucks by converting shipments from over-the-road service to rail, which is typically less expensive.The service also might provide rate relief to ocean carriers moving goods between Montreal and the Port of New York and New Jersey.
Canadian Pacific (NYSE: CP) reached an all-time record in shipping grain volumes in the 2018-2019 crop year, the company said on August 1. The railway hauled 26.8 million metric tonnes of grain and grain products in the crop year that ran from August 1, 2018 to July 31, 2019. Canadian Pacific also reached an all-time monthly record in April when it moved 2.6 million metric tonnes.
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Canadian National (NYSE: CNI) reached an all-time record for hauling grain in the 2018-2019 crop year. Canadian National also reached an all-time monthly record in April of 2.72 mmt, and it hit monthly records in November and December 2018 and January 2019. The records occurred despite extreme weather conditions that stymied rail shipments in February and March, as well as restrictions on Canadian canola exports to China, the railway said.
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There is some uncertainty for commodities such as grain, lumber, coal and crude, but Canadian National (NYSE: CNI) leaders are "cautiously optimistic" about volumes and how the company might perform in the second half of the year. "In regards to 2019, we are reaffirming our guidance with continued focus on costs, focus on our PSR [precision scheduled railroading] operation and focus on growth, but staying very mindful of market volatility," CNI chief executive officer J.J. Ruest said during his company's second quarter earnings call on July 23. One area of uncertainty is how much Alberta crude oil CNI can ship in the second half of 2019.
The TransX takeover and increased freight rates benefit Canadian National's (CNI) Q2. However, lower volumes at the Metals and Minerals plus Forest Products units partly dampen results.